The Bank for International Settlements (BIS) called for the adoption of a unified ledger monetary system in its Annual Economic Report released today.
According to the report, the unified ledger will combine the benefits of tokenised assets and central bank money to improve existing financial systems. This was extensively explained in the third chapter of the report titled ‘Blueprint for the future monetary system: improving the old, enabling the new’.
The report’s blueprint involves the integration of diverse elements including tokenised assets and central bank digital currencies (CBDCs) on a programmable platform. Its introductory part highlights the need for change in monetary systems as societal needs evolve and recognises tokenisation as the key development in the new era.
BIS head of research, Hyun Song Shin emphasised the benefits of integrating different assets on the same platform.
In a media briefing, he said: “Bringing together central bank money, commercial money, and different assets on the same platform, all tokenised and interacting, opens up a whole new range of possibilities… This would be a game-changer in how we think about money and how transactions take place.”
Crypto and DeFi are ‘flawed’: BIS
The report expressed skepticism towards the utility of crypto and decentralized finance (DeFi) on a global scale, labeling them as ‘flawed’ and lacking confidence in their effectiveness.
An excerpt reads: “Crypto and decentralised finance (DeFi) have offered a glimpse of tokenisation’s promise, but crypto is a flawed system that cannot take on the mantle of the future of money.2 Not only is crypto self-referential, with little contact with the real world, it also lacks the anchor of the trust in money provided by the central bank.”
The description of stablecoins further underscored the BIS’s hardline stance on cryptocurrencies.
“While stablecoins have mushroomed to fill this vacuum by mimicking central bank money, the implosion of the crypto universe in the past year shows that there is no substitute for the real thing.”
The report further elaborated on the approach of the BIS, highlighting its adoption of a diverse strategy towards tokenization, with the central bank playing a key role in the process.
BIS and BOE partner with Quant for CBDC
BIS took a significant step in its exploration of digital currencies by announcing a partnership with Quant alongside the Bank of England to investigate the application of CBDCs in retail payments through APIs (application programming interface).
The project dubbed ‘Project Rosalinda’ was successfully in its testing phase, leading to speculations of the development of digital pounds.
